Becker's Spine Review

20 DEVICES & IMPLANTS Stryker's April sales down 35-40%, but recovery expected in the coming months: 6 key points from CEO Kevin Lobo By Laura Dyrda S tryker Chairman and CEO Kevin Lobo addressed several key trends for the company over the next few months and year during the first-quarter conference call, as transcribed by Seeking Alpha. 1. April sales will be down 35 percent to 40 percent year over year, but Mr. Lobo said the next few months could be better. "Looking at the remainder of the quarter, we are en- couraged by the planned gradual resumption of elective surgeries in the U.S. and abroad. Portfolio products are being impacted by COVID-19 in numerous ways. Clearly, we are seeing a deferral in elective procedures, partic- ularly within our orthopedics and spine busi- nesses. We fully expect, given the chronic and progressive nature of the conditions impacting these patients, patients, that the vast majority of them will be treated in the coming months." 2. e company is supporting its sales force and continuing to invest in a new pipeline of products to prepare for surgeries to ramp up again. It is also moving forward with its Wright Medical integration efforts. "Given the impact of the virus on competitive hiring, we are expecting a minimal level of sales force attrition," said Mr. Lobo. 3. ere is pent-up demand for orthopedic pro- cedures, and Mr. Lobo sees the recovery coming in waves. "You have a number of employees that are furloughed that would love to get their pro- cedures done now while they have health cov- erage, worried about what could happen in the future. at could be the first wave of resump- tion procedures," he said. "en you also have people who have taken time off and that may not be able to take time off later, so that could cause a slight dip and then resumption again." 4. Prior to the pandemic, there was great mo- mentum for the Mako robotic surgical line and Mr. Lobo sees that resuming aer elective pro- cedures are recovered. "Liquidity of the hospi- tals is important when you're outlaying large amounts of money. But we see tremendous signs of continued interest," he said. "No order is being canceled, just being delayed a little bit until elective surgeries resume…hospitals do see it as a differentiator and we continue to be very bullish about the prospects of Mako." 5. Mr. Lobo said he was pleased with how the company's spine business is progressing and there were improvements since the K2M ac- quisition prior to the pandemic. ere were a number of products set to launch in the first quarter. "Unfortunately, that got derailed, just like everybody else's spine business…we're not immune from that," he said. "But I would say I feel as good as I felt about our spine busi- ness since the acquisition of K2M. Every day, we sort of continue to build momentum." 6. Stryker has created a strategy around sell- ing implants to ASCs over the past few years aer Mr. Lobo was initially concerned about how ASCs would impact the business. e company also has a flexible financial program that helps ASCs purchase the Mako robotic technology. "Now I'm actually believing that [ASCs] are going to be a very good thing for us because … we have everything they need for their surgery and we have the disposables and the implants," he said. "Wrapping that up in a financing solution gives us a really tre- mendous advantage as more and more proce- dures go to the ASCs." n Globus Medical net profit down 21.9% in Q1, US sales up 7.4% — 6 things to know By Alan Condon O rthopedic device company Globus Medical posted a first-quarter net profit of $25.9 million, represent- ing a 21.9 percent decrease year over year. Six things to know: 1. Global sales increased 4.2 percent to $190.6 million in the first quarter, compared to the same period last year. 2. First-quarter U.S. sales, including robotics, rose 7.4 per- cent to $158.4 million, and international sales decreased 9.3 percent to $32.1 million year over year. 3. The company estimated the negative sales impact of the COVID-19 pandemic to be roughly $20 million in the first quarter. 4. Globus Medical launched three spine devices in the first quarter, ending with cash, cash equivalents and mar- ketable securities of $657 million. The company remains debt-free. "Our conservative financial philosophy has po- sitioned us well to ride out this difficult time without hav- ing to reduce our commitment to any important long-term growth initiatives," said CEO Dave Demski. 5. Diluted earnings per share was $0.25 and non-GAAP di- luted EPS was $0.29. 6. Due to the uncertainty surrounding the duration of the pandemic, Globus Medica did not provide a full-year finan- cial forecast. n

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